SUPPLY OF SOFTWARE NOT DESIGNED SPECIFICALLY FOR ANY CUSTOMER IS “SUPPLY OF GOODS"
Whether Software is regarded as goods or service in GST?
In terms of Schedule II of the GST Act, 2017, development, design, programming, customization, adaptation, upgradation, enhancement, implementation of information technology software and temporary transfer or permitting the use of enjoyment of any intellectual property right are treated as services.
Now the question is if a non-customized software is goods or service?
Let us refer to the case Solize India Technologies Private Limited (GST AAR Karnataka) who had sought for Advance Ruling on whether the software supplied by the applicant qualifies to be treated as Computer Software resulting in Supply of Goods.
The applicant states that he is engaged in purchase of software from their principal partner and supply the same to their customers. The conditions of agreement between principal partner, applicant and customers inter-alia include that the applicant and customers shall not:
By the software supplied by the applicant, the end-customer could achieve desired results in their field of operations. It is reiterated that the software supplied by the applicant could be equally used by various customers depending on their requirement.
The applicant purchases the off-the-shelf software which are not developed for any specific client and the same software is sold to all the clients. Hence, we agree that the software sold by the applicant is a pre-developed or predesigned software and made available through the use of encryption keys and hence it satisfies all the conditions that are required to be satisfied to cover them under the definition of “goods”.
Further, the goods which are supplied by the applicant cannot be used without the aid of the computer and has to be loaded on a computer and then after activation, would become usable and hence the goods supplied is “computer software” and more specifically covered under “Application Software”. Hence the supply made by the applicant is covered under “supply of goods” and the goods supplied are covered under the HSN 8523.
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Rutu M Doshi